Should Government Consider Corporate Social Responsibility When Awarding Contracts?

Recently, I had lunch with a public official and some client executives, when the topic of corporate social responsibility came up. We spoke about how companies are giving back to the community and why the government should care more about these efforts when awarding government contracts. The question was asked: Shouldn’t the companies who give back to the local community in a meaningful way earn some type of recognition in the purchasing process?

The term “Corporate Social Responsibility” or “CSR” can mean different things to different audiences. I define it broadly as a company’s positive impact on society and the environment through its operations and interactions with employees, consumers, investors and communities. Goodmans Interior Structures, a local business that believes in CSR, even boldly proclaims on a mural in its Phoenix office: “We will build a community that takes care of its sick, supports its weak, inspires its artists, protects its resources and promotes faith for its citizenry.” But, CSR isn’t just good for the community. It’s good for business too by inspiring accountability, improving goodwill, promoting employee morale and positively impacting investor relations.

What Constitutes CSR?

When we talk about CSR, it can mean a wide range of activities. It could be in-kind and financial donations, employee volunteer days, or partnerships with community stakeholders. It could also mean environmental sustainability. Many tech start-ups consider giving back to be an inextricable part of their business model – making the world a better place through innovation.

CSR may even dovetail with a company’s products and services. For instance, a local Arizona start-up, TouchPoint, gives away dozens of TouchPoints via its Touch Of Hope Scholarship Fund. Salesforce.com has an affiliated nonprofit, Salesforce.org, which supports the world’s largest technology entrepreneurship program for girls, has engaged and inspired over 10,000 girls across 100+ countries, with 26 percent of alumnae going on to major in computer science.

Whatever form it takes, companies are facing increasing expectations that they will make corporate philanthropic investments. And, it’s no secret that Millennials are more engaged in philanthropic causes now than in years past according to Phase 1 of the Millennial Impact Report. Even Forbes Magazine recently outlined the CSR Trends to watch in 2018.

So, if responsible and philanthropic business practices are making such a big impact on society, is it time that government sets increased expectations around CSR and rewards those suppliers who have given back to the local community? I’m guessing that the majority of taxpayers would be supportive.

What Might this Look Like in Action?

The mechanics of including CSR as a vendor qualification becomes the next task. Having a fair and open competitive process means that the evaluation criteria are clearly defined. While there have been a number of academic articles researching various methodologies and mathematical models to evaluate CSR, perhaps a starting point is whether the supplier has a CSR policy or Code of Conduct.

Cisco, for instance, publishes a Corporate Responsibility Report. There are also standards like the ISO 26000 that provides guidance on how businesses and organizations can operate in a socially responsible way. The United Kingdom even has a national standard for community investment excellence called CommunityMark. Maybe it’s just a requirement that a supplier explain its community activities and all suppliers receive a uniform number of points for having local involvement. Because of the increased expectations of what companies can (and should) do when it comes to being more purpose-driven, the hope is that all companies would be winners.

It’s a positive shift that companies are starting to embrace company-driven giving to community entities and charitable endeavors on their own. I believe, and am pretty confident taxpayers would agree with me, that we can further impact our local communities if we give businesses yet another reason to emphasize - and deepen - their philanthropic commitments by including it as an evaluation factor in government RFPs. All of us stand to benefit from this type of approach - and hasn’t mutual community growth and progress always been government’s ultimate goal after all?